Press releases today this did not end ammic bring. We have more details on what happened here today. Yes. Also yahoo getting active. Shares surged today as investor taking a big position in the stock. There it is up. We will have the latest on whos behind this and how ceo is reacting. Also, of course, these markets, i mean, volatility is back in a big way this week with the dow bouncing back after one of the worst days of the year yesterday. The dow enjoying its best day in seven months or something i saw. 181 points. Undoing some of the damage of yesterday and we shouldnt forget the week its been. Tripledigit moves in both directions. Maybe its that time of yore. We got the s p up 17 points. We are at 1983 at this hour. Nasdaq doing very well up 44 points. But again, i mean, we have had 100point swings for the dow every day this week. Multipercentage moves for all the major averages. Three of them down. Two of them up. Look at the russell. Up right now at 1118. Lets talk about it. In our exchange, he said, joe durant with us today and ken mahoney, kevin caron, monica madai and our own rick san tell lo joining us, as well. Joe, what do you make of the volatility this week . Whats going on and what are you doing about it here . I think a couple of things. What you are seeing is the market is reflecting the self correction happening for about six weeks now. The russell has been down almost 10 . Many stocks down 20 or more. The indexes have done very, very well. All that we have seen this week is market reflecting that and a concern about the end of easy money. The beginning of higher interest ratds. It ees causing the dollar to g higher in anticipation and especially relative to the euro and the stock market is reflecting that. More volatile, especially for company that is have less flexibility with their financial structure and thats why the small caps have been lagging. Will you buy the small caps here, joe . Do you think they have had the move . No, i dont think so. Because even at these valuations where relative to the s p at quite extreme levels even with the decline we have had. No. Ken, youre calling for an uptick in volatility anyway. Wh what does this mean for you . We are calling far choppy market with upward bias. We are looking for headwinds and a stealth correction going on and the major averages holding on to the year highs and yet underneath it seen deter ration and seen the small cap taking it on the chin. For us fundamentals and europe concerns us. We see the economies over there continue to slow down and the policymakers further and further behind the curve and russia is a wild card and continuing to be consistent. We recently sold the r. I. P. And preparing to buy the next dip in the market. Buying the next dip. Kevin, we have now had both joe and ken talking about a stealth correction. I guess people out there think is this going the morph into an event to pull a major index down 10 . Yeah. I wouldnt be surprised to see a bit more of a correction only because we have had such a good run of it. Data has been incredibly good relating to the economy. 4. 6 print on Third Quarter gdp. Second half of 3 . Thats all the good news. The question is, the elephant in the room is Interest Rates. Interest rates at low levels. You have had a moon shot in equity prices for the last several years. Multiples are about 10 above where they ought to be and reflecting improvements in economy and the real question is what does the fed do next . Time to start to normalize Interest Rates . Currency markets are picking up on it. All of this is part and parcel of an adjustment to an economy thats Getting Better and maybe choppiness and not expected and its healthy for a market with some pricing discipline. I noted showing the European Market there is that the dax, germany, the weakest market in the european majors. Fellow the 200day moving ampbl and fell as the others bounced a the this juncture. Monica, what are you doing with your clients money right now seeing the volatility pick up here . Look. You know, we are mostly in alternatives. Were doing a lot in real estate, were in specific plays so this because youre is that a specific strategy right now or is that where you see the better opportunity . I think investing in what you know should be everyones specific strategy and so were focusing on real estate in texas where you are seeing a lot of employment strength and a lot of people moving down here but, again, you know, one of your guests mentioned the high point is a higher gdp that we saw for Second Quarter and i would argue as a metric of economic vitality, you should look into the details of driving gdp. You have a new definition of corporate profits. And youre actually seeing more spending for obama care thats required and same token personal spending an consumption is 20 below expectations so that key metric of what calls for a strong, healthy economy is wages and we see very depressed wages. So, i mean, i think if youre a hard pressed to say that we have a strong, healthy, vibe rantd consumer. So now as we see the 10year Interest Rate creeping up, is that because, rick santelli, the u. S. Growth outlook looks better, a bill gross effect in the market here at all do you think . Or is it that the stock market is only down 150 on the dow and sits and the s ps only down 15 . Many wouldnt have guessed that yesterday. You know, remember our conversation yesterday. I think the bond market divined something in a very excellent fashion. I think the lack of any major buying pushing 10year rates dramatically under 250, the type of dynamics in the first weeks of 2014 when the equities couldnt get legs together didnt see it. I think we will have more of the same and i think, yes, there was some knee jerk reaction of everything is speculated and mr. Gross, outflows that we need to deal with, they had lots of futures positions, very liquid. I dont know that thats an issue for the markets, but, you know, generalized weak cincinnati the new fundamental to Pay Attention to whether its china and europe and slow moving events. Dont see theyre going to toetdly destabilize equities and i dont think you see a major moon shots on Interest Rates but learn a lesson of yesterday that if the equities kind of still maintain very close to contract high pricing structure i also doubt if were going to get significant tests of 2 1 4, as well. Joe, are you more inclined to want to buy the dips that were seeing right now or sell the strength that we have been seeing lately, as well, in this volatility . So, i think neither. I think what you want to do is look at your personal portfolio. We manage the clients entire net worth and within the portfolio tilt it the direction you should be. We think you want to be in larger cap names. Instead of dividend payers gorks to growers. You have to figure out in advance because the market acts in advance what should you be doing in a higher Interest Rate environment . Before Interest Rates go up, those stocks are the ones that will be already have gone up so, again, shifting from just dividends to dividend growers, focusing on larger cap than smaller gap and emerging markets and forward leaning. Europe will get a lot of money pumped into it and you have to expect high volatility. Go ahead. One thing that we are looking at is a hybrid strategy. Everybody has a philosophy to handle the markets but buy and hold and active, if its stocks, etfs you like, buy and hold that. Be more act wif the quarter, 30year portfolio and be able to buy the dips and sell the rips. Not day trading but kind of combination of buy and hold and be active when you see the dips and be able to sell the rips and a better performance in these choppy markets. Kevin, i feel like its two Different Things here sometimes. Joe and others on the one hand talking about positioning for a higher rate environment and rick saying look for generalized slowing growth and monica pointing out that the economy weaker than it appears so, kevin, is that what do you do with those conflicting stoirls . Seems as though investors making two decisions that point in Different Directions here. I think its a couple of Different Things. Bond portfolio, we like the idea of laddering it. Cash in portfolio. If valuations dont make sense and ultimately if you look out three to five years you get a very different sense as to relative to what happened this week. And as a matter of fact, as far as the correction of volatility is concerned, it is really nothing. S p at 2,000. Equity values, u. S. Equities valued at Something Like 23 trillion so we didnt move all that much this week. Just stick to the knitting. Focus on Cash Rich Companies growing reasonable price. Kelly, one thing. Be looking at correlation getting decoupled again. Europe is in a different place and the banks act differently than the u. S. In the future. Since you mentioned that, joe, we are asking the viewers later which section they would rather buy of the world. U. S. Or europe. Show of hands here. How many would buy europe right now . Anyone . Okay, joe. Go ahead. I just think you want to go where the market isnt. They have easy money for a very long time with lower rates than the u. S. In a year from now and recovery, theyre 18 months behind us. Would you have bought the u. S. 18 to 24 months ago . Yes. Do they have less, more risk . Yes. The market reflected it. You dont want to go where all the money has been made so you want to be concentrating in the u. S. And should be looking at europe now. Fair point. Very good. Thank you all. Nice the see you. Thank you for joining us. Appreciate it. Well pick back up on the theme of the u. S. Versus europe and especially talking about strong dollar. Thats all coming up. Yeah, the economys surging by 4. 6 . Thats the last revision for this Second Quarter. Fastest rate of three years so is it full steam ahead for the economy and could this force the feds hand to raise rates sooner rather than later in thats within the big question all along. And this mention, are you better off investing in the u. S. Amid the economic jolt or europe . Is that the better play as the economy teeters . Weve got both sides of that debate. And we do want you to weigh in. A chance to vote on this is coming up. Plus, as you have heard, bill gross, shocking story going around wall street today. He leaves pimco. The bond giant that he founded in 1971. He heads to janus capital. Coming up, well discuss whens behind the shakeup and whether its a major problem for pimco still to come. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Welcome back. A strong day here. Nike surging double digits after a strong earnings beat yesterday. After hours. Adding about 63 to the dow up 186 today. But again, the other indexes up to the tune of 1 . Also helping word out that the u. S. Economy expanded by 4. 6 , the fastest growth rate in about 3 years. Good news or is it . That is if you worry about the fed raising Interest Rates. Sooner rather than later. We have more on what it means now. Joining us, chris thornburgh, chris lowe and very own steve liesman. Welcome, everybody. A great group, steve, by the way, no surprise to you. You were saying it would be a strong number and heard the concerns monica raised last segment saying perhap its obamacare related. Trends arent as strong as they appear. I want to explain why its no surprise. We have the rapid update. Survey of ten forecasters who have a tracking survey every time data comes in, put it in gdp and they tell us how that changes the forecast. We upgraded of 4. 2 to 4. 6 september 11th so that was quite a bit before this number came out and in pretty much with the expectation and want to follow it go to cnbc. Com rapidupdate and following it up. You have one quarter thats a negative 2. 1. Another is 4. 6. How do you break the tie . With the Third Quarter and the Third Quarters coming in 3 plus. Good consumer spending, good capital spending. Theres the forecast of the tracking for the Third Quarter with a range. You can see whos where. Goldman is right there at 3. 3 and not the sort of radical economists. These guys are the center of the street here. Bar class at 2. 8. Theres still data to come. Overall the ties broken by somewhat above trend growth in the third quert. Do you win anything for nailing the number . If you want a coffee cup with my signature on it, send me an email, bill, ill send it to you. Chris, is this the kind of growth rate . Were told by the fed to be watching job growth and inflation expectations. What does this number mean to them in terms of fed policy . Again, a lot of the Second Quarter simply a bounce from the big negative of the First Quarter. Ultimately, first half of the year was kind of weak largely because of the external account but i echo what was just said. We have a monthly model, as well. Tracking 3. 3 to 3. 4 and candidly all indications are to continue. Consumer credit is doing great. The banks are lending. Nonresidential construction is up. Housing market is rebounding. Business spending is doing well. You look at chris, can i just chris, i want to interrupt real quick. This housing is a big absence in all of this. Do you think i mean, if housing is on board, dont we have all cylinders firing here . Absolutely. And thats sort of a point. I know we went through a mini down spell because the investors went away. But now you are seeing the numbers. Mortgage credit starting to expand again. The housing market. We saw that good new housing sales number. Inventorys still low. My guess is by the end of the year Single Family permits start to trend up again and next year is a very good year for the builders. Chris lowe, i dont mind cold water on this. I wonder if it takes a form of as trying to talk about inflation expectations. Explain whats going on here and why the market is worries of inflation when everything should be pointing towards more momentum if the economy is improving. Thats right. Look at inflation expectations. Fiveyear forward fiveyear inflation rates, the break even rate is fallen by almost half a percent in the last few months. Wow. What it reflects is strength of the dollar not just against the euro but all major currencies. We are up about 5. 5 which, by the way, is almost exactly how much Commodity Prices are down. So already were seeing the deflationary impact of the lower dollar. I think if the dollar keeps moving like this for a couple of months were looking at an inflation rate falling to somewhere between 1. 5 and 1. 75. What do you think about that, steve . What if we do see the dollar continue higher, deflationary implications it has, pressure it puts on commodities and what that means to the fed watching inflation so carefully . I dont think the dollar within a certain band matters a whole lot. What matters is change in adjustment. You have guys doing trade and a certain price and the dollar is 5. 5 greater in value and that changes the calculus at the margin for some Business People to take adjustment. Losers and winners out of that. I dont think its a big enough move to disrupt or even gives the fed a little bit of breathing time with this much impact of the dollar on inflation. Thats it. This is why its so important. The very moment that everybodys talking about the fed behind the curve, in fact, if were to believe and i understand it can move around and the market saying that the bias is dovish side of things. Thats right. Let me respobd real quick. It doesnt matter, kelly, you know this, how we get to the real growth number. The inflation adjusted number. We can get there with nominal growth at 3 and, you know, inflation at 1 . Really the real number that matters and so if we get there with low inflation, as long as you have that economic activity, 3 , 2. 5 , still a good number. Look. What bill dudley said this week from the new york fed is that if the dollar continues to appreciate like this, i agree, the movement we have had so far is fine but if it continues, the fed should move later because it will affect gdp growth and it will affect inflation. Its going to limit exports and so on and the reason the dollars moving, of course, is that the u. S. Is going towards tighter policy while the rest of the world is going toward easier policy. I dont think this dollar move is done. All right. Before we let you guys go, steve, bill gross news today with leaving pimco, the stunning story moving to janus. Somebody asking me this morning how much of his lack of performance the last couple of years had to do with this. What do you say to that one . Well, ive listened to bill over a long period of time. I think hes an extremely smart person. I have sort of raised my right eyebrow as far as it could go with the calls on the Federal Reserve and not understood what he said and seems to me it was long in a lot of important occasions and manages 2 trillion worth of money but in terms of underperformance, i wonder if its getting bad advice or had the Federal Reserve wrong. I guess the phrase that sticks in my mind is tim robbins of Shawshank Redemption calling the warden on tuesday. Remember that . Thats what bill gross and the fed made me think of. Wow. And Shawshank Redemption debuted 20 years ago this week. As you well know. My favorite movie. Thank you. More on the bill gross story coming up, as well. What he might be up to with the new fund. He is, of course, weighed in often on whether the very issue of inflation expectation. Janus with a big pop on it today, as well, along with the rest of the market rallying. Heading toward th